Fourth-quarter net earnings were $0.31 per share compared to $0.19 per share a year ago. Excluding special items, adjusted quarterly earnings of $0.14 per share equaled prior-year results.

Full-year net earnings of $0.75 per share exceeded prior-year of $0.42 per share. Adjusted net earnings of $0.48 per share compared with $0.59 per share a year ago, reflecting year-over-year fiber cost increases equivalent to $0.80 per share.

Tissue reported full-year operating profits of $46.1 million, its second best year ever, and Paper reported adjusted operating profits of $16.2 million, both demonstrating earnings sustainability in a record-high input cost environment.

With a year-end debt-to-capital ratio of 33 percent, the company’s balance sheet is well-positioned to fund strategic investment.

The company reported fourth-quarter net earnings of $15.2 million, or $0.31 per share, compared with net earnings of $9.2 million, or $0.19 per share, in the prior year. Net sales increased 1 percent to $260.2 million while shipments declined 4 percent to 162,000 tons.

Fourth-quarter results included a net credit of $12.7 million, or $0.26 per share, related to conversion of the previously claimed alternative fuel mixture tax credit to the cellulosic biofuel producers tax credit; an after-tax charge of $2.4 million, or $0.05 per share, related to a rate adjustment associated with a natural gas transportation contract for a former manufacturing facility in Groveton, New Hampshire; and an after-tax curtailment charge of $1.9 million, or $0.04 per share, due to the freezing of benefits associated with a cash balance pension plan. Prior-year results included after-tax timberland sales gains of $1.6 million, or $0.03 per share; an after-tax alternative fuel mixture tax credit of $2.3 million, or $0.05 per share; charges related to a tax audit settlement and other permanent tax items of $1.0 million, or $0.02 per share; and after-tax facility closure charges of $0.6 million, or $0.01 per share. Excluding these items, adjusted fourth-quarter net earnings were $6.7 million, or $0.14 per share, compared with prior-year adjusted net earnings of $6.8 million, or $0.14 per share. Adjusted net earnings are a non-GAAP measure and three-month and year-end results are reconciled to GAAP earnings below.

For the full-year 2010, adjusted net earnings of $23.8 million, or $0.48 per share, compared with adjusted net earnings of $28.8 million, or $0.59 per share, in the prior year. Net sales increased 2 percent to $1,055.7 million while shipments declined 3 percent to 667,000 tons.

Thomas J. Howatt, president and CEO, commented, “2010 results reflect the earnings stability achieved through Tissue segment growth and Paper unit restructuring. Despite record high fiber costs, Tissue posted its second most profitable year and Paper achieved solid improvement over the second half of the year as input costs stabilized. And the company achieved its safest year on record, continuing a decade-long trend of improved safety performance. With modest debt and substantial credit capacity, the company is well-positioned to fund strategic investments. Given Tissue’s profitability and growth profile we view this business segment as our principle avenue for future investment.”

Commenting on current business conditions and near-term outlook, Mr. Howatt remarked, “We expect 2011 to be a year of transition for the economy as a post recessionary environment gives way to more stable and predictable growth across our core markets. While first-quarter earnings will be impacted by the rebuild of our Brainerd machine, seasonal demand weakness and elevated fiber prices, we’re confident in our ability to achieve year-over-year earnings improvement over the balance of the year.” Excluding the impact of the Brainerd machine rebuild, adjusted first quarter earnings are expected to be in the range of $0.03 - $0.05 per share compared with prior year adjusted earnings of $0.08 per share.

SEGMENT RESULTS

The Tissue segment posted fourth-quarter operating profit of $11.1 compared with fourth-quarter profit of $12.5 million last year as net sales and shipments both declined 1 percent. For the full-year, operating profits of $46.1 million compared with 2009 record operating profit of $49.5 million as net sales increased 2 percent on flat year-over-year shipments. While demand for "away-from-home" towel and tissue products declined 1 percent for the year, Tissue's value-added product volume increased 7 percent and represented 49 percent of total shipments. Despite sluggish demand and a constrained pricing environment, Tissue largely offset fiber cost increases of $12 million to achieve 2010 operating margins exceeding 13 percent.

The Paper segment’s fourth-quarter operating loss of $0.7 million included pre-tax charges of $3.8 million related to a rate adjustment associated with a natural gas transportation contract for the former Groveton mill, and pre-tax charges of $1.4 million associated with conversion of the alternative fuel mixtures tax credit to the more beneficial cellulosic biofuel producers tax credit. Prior-year operating profit of $7.1 million included pre-tax gains of $3.7 million from the alternative fuel mixture tax credit and pre-tax charges of $0.9 million related to facility closures. Excluding special items, Paper's fourth-quarter operating profit of $4.5 million increased modestly as compared with operating profit of $4.3 million last year. Net sales increased 2 percent while shipments declined 5 percent, reflecting gains in selling price and mix which followed facility closures and target market re-alignment.

For the full-year, Paper operating profit of $12.3 million compared to operating profit of $9.6 million last year as net sales increased 2 percent and shipments declined 4 percent. Excluding a pre-tax charge of $3.8 million related to a rate adjustment associated with a natural gas transportation contract for the former Groveton mill, adjusted operating profit of $16.2 million compared to prior-year adjusted operating profit of $21.9 million. Having absorbed $51 million in year-over-year fiber cost increases, 2010 results demonstrate the relative profit stability achieved through recent restructuring activities. Further progress is expected in 2011 as the Paper segment completes the $27 million rebuild of the Brainerd, Minnesota, paper machine and flexes papermaking operations at the Brokaw, Wisconsin, mill from seven days to five days per week to align production capacity with core premium print and color demand.

CELLULOSIC BIOFUEL PRODUCER TAX CREDIT

During the fourth quarter the company elected to convert – for qualified Black Liquor gallons produced during 2009 at its Mosinee, Wisconsin, facility – the previously-claimed refundable $0.50 per gallon alternative fuel mixture (“AFMC”) tax credit to the non-refundable $1.01 per gallon Cellulosic Biofuel Producer Credit (“CBPC”). Having repaid approximately $15 million in AFMC benefit and related interest during the fourth quarter, the company expects $27 million of cash benefit from the CBPC prior to its expiration in 2015.

TIMBERLAND SALES

During 2010 the company sold 6,700 acres of timberland for an after-tax gain of $4.9 million. With approximately 7,900 acres remaining in its sales program, the company will continue to own and manage 77,000 acres upon its completion.

Wausau Paper produces and markets specialty papers for industrial, commercial and consumer end markets as well as a complete line of away-from-home towel and tissue products. The company is headquartered in Mosinee, Wisconsin, USA.